By Nadège Compaoré
Nadège Compaoré is an incoming Assistant Professor of International Relations at the University of Toronto. Her research, which to date has focused on the global governance of oil revenues in Gabon, Ghana, and South Africa, lies at the intersection of International Relations theory, the global governance of extractive resources, as well as gender and race in global politics.
According to the Intergovernmental Panel on Climate Change (IPCC), oil and gas production must be reduced by about 20% by 2030 to prevent temperatures rising more than 1.5 degrees Celsius from their pre-industrial level. This is needed to help combat climate change and the resulting environmental disasters multiplying globally at a dangerous speed. While some of the biggest oil companies in the world have publicly acknowledged their commitment to fight climate change through environmental, social and governance principles, in practice they plan to continue pumping even more oil and gas, and to proceed with business as usual. For instance, in a sharp contrast to the IPCC’s calls, ExxonMobil plans to increase its oil and gas production by 25% in 2025. It is this continued commitment to more oil production that has led ExxonMobil to its recent oil discoveries off the coast of Guyana in 2015. Exxon’s focus has been squarely on its financial bottom line, with environmental concerns sidelined from the agenda. It should therefore not be a surprise that the company did not find it against its principles of responsible investment to initially negotiate environmental permits lasting 24 years, far beyond the 5-year term expected in standard practices globally. The shorter duration recommended for environmental permits is to ensure that companies have to re-apply for permits more frequently, therefore holding them more accountable for their environmental impact more regularly, and aligning with best practices.
Although the duration of Exxon’s environmental permits in Guyana have now been shortened to 5 years thanks to legal action and activist pressure from local civil society, what is more worrying is that over the years the Government of Guyana could have been party to such an unfair and truly compromising agreement in the first place. This raises serious questions about the overall architecture of the oil contracts signed with ExxonMobil, presumably on behalf of the people of Guyana, and specifically about the readiness and competence of the government to engage with this super major in a way that benefits the whole country. For instance, there have been reports that “not a single study” was done on the environmental risks of ExxonMobil’s planned production on Guyana’s marine life. This is why the people of Guyana should remain extremely vigilant about Exxon’s operations and the government’s role moving forward.
Oil production in Guyana started in December 2019, making the country one of the newest oil producers in the world. There are many lessons to learn from other oil producers in the global south, especially since most of these oil-rich countries are said to be suffering from an “oil curse”, whereby the discovery of oil has led to worsened socio-economic conditions for their populations. For example, Nigeria –the biggest and one of the oldest oil producers in Africa, with a remarkable average production of over 2 million barrels of oil per day, has seen increased levels of poverty, conflict, displacement, and environmental degradation since oil discoveries. This is further compounded by the extremely detrimental effect of fossil fuels on the environment, which begs the question of whether countries should even be embarking on oil production in the first place. The short answer would be no, especially if we recall the urgent need to reduce carbon emissions and prevent temperatures from rising. So what to make of largely negative experiences of oil-rich countries such as Nigeria?
Weak government institutions, accompanied by a lack of political will and/or capacity, a lack of prior community consultations, and a lack of transparency, are often highlighted as the main culprits of “oil cursed” African countries. At this early stage of oil production in Guyana, learning from the lessons experienced elsewhere means that citizens should pay careful attention to these drivers of the oil curse, as a way to hold both their government and Exxon accountable for their actions and their impact on the country’s welfare.
First, paying attention to a potential lack of political will and/or capacity is extremely important, to ensure that the government is not stuck in bad deals that can last decades. In Guyana, the recent case of the amended environmental permits shows that local expertise and activism will continue to be crucial to keeping the government responsible to its people. Pushing the government towards capacity building that would address the information asymmetry that is often present in corporate-state negotiations in the global south is a concrete step that can be resolved, especially by calling on independent experts with experience in other sites for guidance.
Second, there should have been more systematic prior consultations with local communities regarding such massive levels of oil investment with such direct implications for the people and their environment. Oil exploration and production directly impact people’s access to land, water, and forestry resources, in addition to the high levels of carbon emissions that contribute to climate change. Citizens’ right to information, especially at the pre-extraction stage, is key to asserting their agency over how their natural resources should be used, and ultimately provides an added layer of accountability over the types of deals any government enters into. The aim is for informed citizens who have accessed prior consultations in a meaningful and accessible manner to be able to hold their government accountable, hopefully contributing to fairer deals and more sustainable outcomes, including the decision of whether they even consent to oil extraction.
Third, the context surrounding the original deals between the government of Guyana and Exxon grew out of such of secrecy that the unfair outcome for the people of Guyana shocked concerned civil society actors. The lesson from other countries is that citizens should call for more transparency in the governance of their oil resources, and in fact this should happen prior to production. Although the oil sector is notorious for its secrecy in general, the last two decades have seen global calls for increased transparency in the extractive industries. Since 2017, Guyana has officially joined the global governance initiative called the Extractive Industries Transparency Initiative (EITI) as a candidate country. The EITI seeks to foster transparency in the governance of oil, gas, and mineral resources worldwide. While the earlier focus of the initiative was on revenue transparency, it has since expanded to cover the entire value chain of the extractive process, including contract transparency and expenditure transparency. Guyana is yet to be fully assessed against the EITI Standard (to verify whether it is compliant), but they have submitted a 2017 report, and the process is in progress. It will be worth following Guyana’s EITI participation very closely, especially since the 2019 EITI Standard, the latest EITI Standard, includes environmental disclosures – which was not the case for previous EITI Standards. It will be important to not dissociate socio-economic and environmental dimensions when considering the impact of oil in the country, and when identifying mechanisms through which to hold both the government and the oil company accountable. As a global south country, understanding that achieving development is more than securing economic growth and instead necessarily includes environmental security, is the only way to move forward in a sustainable manner.
